Costco chases $1billion in Australian sales

The Australian division of US-based Costco could turn over $1 billion in sales in the coming financial year, according to a report in The Australian newspaper this week.

Costco could reach this potential milestone for the retailer, despite recent news from the USA that during the three months to August 2014, sales growth in Australia was weaker than that across its international store portfolio because new stores were taking sales from established stores.

Managing director of Costco Australia Patrick Noone said that the retailer turned over $660 million last fiscal year and hopes to top $1 billion this fiscal year.

This compares with Aldi Australia’s around $4 billion in sales from 350 stores, while Aldi plans to open in Western Australia in 2016 and open 70 stores.

Despite Costco enjoying steady expansion since the first warehouse store in Melbourne’s Docklands in 2009 and having only seven outlets Australia-wide, two new stores opened at Casula in Sydney and Ringwood in Melbourne are starting to cannibalise sales at older, existing stores.

In another setback for the American retail giant, a court in South Australia rejected Costco’s application in mid-October for a licence to sell liquor at its 7th Australian and first Adelaide outlet at Kilburn, set to open on November 19.

Costco applied for a Special Circumstances liquor licence instead of a normal merchant’s licence because, unlike other bottle-shops, it sells to paying members and is not open to the general public.

It planned to stock about 300 kinds of bulk beer and wine for members who pay an annual $60 fee.

Licensing Court Judge Brian Gilchrist refused the application, saying it was not in line with community standards. “It may set an undesirable precedent for the grant of further special circumstances licences,” he said.

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